RICHMOND — The General Assembly allocated $87.5 million in the current budget for the Virginia Housing Trust Fund, a financial resource that helps preserve and develop affordable housing units. That’s the largest investment from the state in the fund’s history.
More funding has equaled more affordable housing — in fiscal 2024, $60 million went toward the creation or preservation of more than 3,000 affordable units, compared to $5.4 million generating about 300 units in fiscal 2014.
But in 2021, the last time a comprehensive statewide housing needs assessment was conducted, the Joint Legislative Audit and Review Commission found the state would need to allocate closer to $1.6 billion annually to develop 20,000 units per year to meet the state’s need for affordable housing in 10 years.
“We still have a long way to go,” said Isabel McLain, director of policy and advocacy at the Virginia Housing Alliance, during a presentation to a Virginia Housing Commission workgroup at the General Assembly Building Tuesday.
The VHTF helps get existing projects with other funding sources over the finish line. The bulk — 80% — of the funds are administered to the Affordable and Special Needs Housing loan pool. Those loans then go to projects with units affordable to people earning 80% or less than the area median income. Affordable is defined as costing no more than 30% of one’s income.
The other 20% of the VHTF funds go toward homeless reduction grants, which can pay for projects like a new shelter or rental assistance.
State Sen. Emily Jordan, R-Smithfield, proposed a bill this past session that would change that formula to a 65-35 split. That bill died in committee. At Tuesday’s meeting, she made the case it should be reintroduced.
“In Hampton Roads, we know that we have an affordable housing issue,” she said. “What this bill sought to do is provide some flexibility in that ratio so we could try to, in the immediate forefront, find some additional funding to address our targeted homelessness population as we work towards addressing the affordable housing crisis we have in Hampton Roads.”
Members of the workgroup did not have additional comments or questions for Jordan, but chair Del. Briana Sewell, D-Woodbridge, said the group looked forward to working with Jordan on the issue in the future.
Three senators, five delegates and three governor appointees sit on the Housing Commission. There are two workgroups within the Commission: the one that met Tuesday studies affordable housing solutions, and the other studies local land use and and community living. The workgroups, which include stakeholders from different housing sectors, provide recommendations on proposed legislation to the full commission, which in turn makes legislative recommendations to the legislature.
The workgroup also heard from Del. Bonita Anthony, D-Norfolk, on her bill to require a geographic equity impact assessment on new affordable housing units. That bill passed the House, but was referred back to the Senate Finance and Appropriations Committee, where it was passed by. The goal, Anthony said, is to correct history of high concentrations of poverty and allow families who qualify for affordable housing more choice on where to live. She cited areas of Norfolk including the Park Place neighborhood and Young Terrace and Calvert Square, two public housing complexes in the process of being redeveloped.
“We wanted to correct decades of precedence where affordable housing has been disproportionately clustered in certain neighborhoods,” she said. “We wanted to unpack some of those structural patterns, we wanted to disrupt some of those cycles of concentrated poverty and oversaturation.”
But Anthony acknowledged the language of the bill could have had unintended consequences, like introducing caps on how many affordable housing units could be in specific neighborhoods.
“I absolutely understand the intent of this bill,” said workgroup member Erin Kormann, legislative counsel with the Virginia Association of Realtors. “I would encourage you to work, and I’m sure you already have, with the affordable housing people and how to tweak that language so that it can’t be used to keep this kind of housing out of certain areas.”
Sen. Glen Sturtevant, R-Midlothian, presented his bill to limit how many single family houses private equity firms and hedge funds can buy. That bill was incorporated with legislation proposed by Sen. Schuyler VanValkenburg, D-Richmond, before it died in committee. Sturtevant said he planned to reintroduce the bill this coming session with added provisions, recommended by the Virginia Poverty Law Center to include limits on how those firms can buy mobile home parks.
“This is only going after the biggest of the big entities, the Wall Street hedge funds and private equity groups,” Sturtevant said. “The threshold that we have come up with is those institutional investors that have $50 million or more in assets.”
Under the guidance proposed by Sturtevant, entities would also only be prohibited from purchasing single family homes if they already had 50 or more properties. Sturtevant acknowledged that only own a small portion of homes — about 6.3% in Richmond, he said — were sold to institutional investors. But he said it matters for first time homebuyers.
“When you have a skewing of market forces by an entity that has a ton of money and the ability to pay cash to be able to come into a housing market, that is going to have in the aggregate effects throughout the rest of the market,” he said. “Homes are for people and are supposed to be owned by people, not as part of some stock portfolio investment strategy.”
The VPLC said that there are also maintenance concerns when often out-of-state private equity firms own mobile home parks.
“What we have seen, especially down in Southwest Virginia, is that they do not put people on staff on site,” said workgroup member Daniel Rezai, a housing attorney with the Virginia Poverty Law Center. “Trying to get someone on the phone to come and take care of a major maintenance issue is almost impossible.”
But some members of the commission appeared skeptical of a ban on mega investors.
“My concern is where a lot of this conversation pops up around the country, it’s motivated by a fear of rental properties in traditionally single-family home ownership communities,” said workgroup member Andrew Clark, vice president of government affairs at the Home Builders Association of Virginia. “But if the focus is truly to make sure that we’re having housing stock and increasing supply and not having these mega investors come in… I don’t think we’d necessarily be moving the needle at all by prohibiting these folks from purchasing these properties when we should be looking at zoning, financing opportunities, all those things that are constraining supply.”
Kate Seltzer, 757-713-7881, [email protected]
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